First, marked progress was made in reforming the tax system. We further improved the plan for the VAT trial reform and worked out a tax policy for the depreciation of fixed assets in industrial enterprises in northeast China. This experience will help us in expanding the VAT reform throughout the country. We carried out careful research to work out a plan for adjusting the individual income tax, after which the NPC Standing Committee approved raising the tax threshold for monthly salaries for the individual income tax from 800 yuan to 1,600 yuan starting January 1, 2006. In addition, the number of items to be reported by taxpayers on their own initiative was increased and efforts to collect income tax from high-income people were strengthened. More research was carried out to improve the new Law on Corporate Income Tax (draft) and the plan to adjust the policy on the consumption tax. In addition, we adjusted the mechanism for distributing responsibility for export tax rebates in light of the new circumstances arising in the course of reform. Beginning January 1, 2005, the ratio of the responsibility of central and local governments for the portion of tax rebates that exceeds the base figure was changed from 75: 25 to 92.5: 7.5, thus reducing the burden on local governments and promoting development of foreign trade.